Do you want to buy a house but you aren’t quite ready yet? If so, a lease option may be the opportunity you’ve been searching for. Discover more about lease option properties and how they can help you reach your real estate goals in our latest post!
Using a lease option is an excellent option for potential buyers. Perhaps you have a blemish on your credit or perhaps you do not have quite enough saved up for a down payment. Utilizing a lease option, or rent to own structure will enable you to lease a house, with the option to buy or walk away after the lease term is up.
How It Works
The agreement itself is often comparable to a rental agreement with an option to buy at the end of the term. That said, there are some crucial differences to be mindful of, such as your responsibility to make repairs, and a greater than average rent payment every month.
What You Will Have To Do
You will always want to have a thorough assessment of the house done prior to signing the agreement. This will provide you a heads up on any future repairs you will need to make. Some repairs are really expensive and you might not be comfortable taking on a property with such big problems. You need to also have a professional appraisal of the house done. This will ensure that the price the seller is asking is reasonable, and will be approved by a loan provider in the future. You never want to skip an appraisal or an inspection just to get a shot at purchasing a house.
Also, as discussed above, you will be the one responsible for repairs instead of the owner of the house. You will also need to pay the property taxes according to some arrangements. These additional costs, plus the typically higher than average rent, can slow you down if you are saving to purchase the home in the future. Keep these expenses in mind prior to signing an agreement.
There are several advantages to entering into a lease to own agreement with a local seller. To start with, you will be able to find and secure a house before you have the deposit together or previously your credit will get approved for a loan. These are both things that need to be taken care of during the leasing period of your agreement. You will also have a locked in price, so if the market increases over the course of the agreement, you will only need to pay what was agreed upon initially. Simply watch the market beforehand. You do not want to enter into an agreement in an area where houses are in fact decreasing in value.
Another excellent advantage is having the ability to “test drive” the house. You can actually get a sense of what it will be like to own, prior to actually being the owner. You can determine your regular monthly maintenance and ownership expenditures, and take a good take a look at commute times and area schools. You will be able to make certain that the community is really right for you, removing any possibility of buyer’s remorse once the sale date arrives.
You will likewise have the assurance in knowing that you have the guaranteed option to buy the house. You will not need to pick up and move at the end of the lease term so long as you are able to get the funding you need, in addition to the down payment. Your credit should also be restored, enabling the buying process to run smoothly for you.
One excellent trick is to find a property that has actually been listed for a while and propose a rent to own agreement. They will not need to reduce their price, and you will get the opportunity to buy a home you like.